Peloton Interactive Inc. (PTON), a wired home fitness equipment maker, is acquiring Precor. For the future of Peloton, this transaction is highly necessary as it will strengthen the supply chain and gain access to new markets.
Closed exercise rooms also contributed to increased demand, including those generated by Peloton, for home sports equipment. The company reports strong demand, which stretches the waiting period to many weeks, for its treadmills and workout bikes. As a result, since they want to get the purchased goods as soon as possible, many prospective buyers also hesitate to buy. The location of Peloton’s production facilities in Taiwan and the related logistical problems are the reason for the delay in deliveries.
Precor is a major producer of professional exercise products based in the United States with a large supply base. Therefore, Peloton gets the chance to establish simulators close to the main sector.
The $420 million transactions are expected to end early this year. At the same time, the development of simulators is likely to commence at Precor’s plants.
Precor will be getting access to new markets as a result of the merger with Peloton. In specific, Precor is now specialized in the manufacture of athletic facilities for gyms, hotels, apartment complexes, and campuses for students. Peloton should then reach these emerging markets quickly and expand distribution to new clients. Moreover, Precor will be used by Peloton to build new product ranges, not just treadmills and exercise bikes.
Peloton Interactive, Inc. (PTON) was up +1.76% to $148.53 on Tuesday while its performance over the past 5 sessions not remained impressive as the company lost about -2.40 percent in the period. However, the company succeeded to add an impressive 400% value to its stock over the past year, bringing its market capitalization to more than $44 billion.